Does the cost of care differ for patients with fee-for-service vs. capitation of payment? A case-control study in gastroenterology

Abstract

Introduction: There is growing evidence to demonstrate overuse of medical resources in fee for service (FFS) payment models (in which physicians are reimbursed according to volume of care provided) compared to capitation payment models (in which physicians receive a fixed salary regardless of level of care provided). In this medical centre, patients with and without insurance are admitted through the same access point (emergency room) and cared for by the same physicians. Therefore, apart from insurance status, all other variables influencing delivery of care are similar for both patient groups. However, physician reimbursement differs for both groups: FFS for patients with private insurance (i.e. the admitting physician's reimbursement escalates progressively with each day that the patient spends in hospital) and base salary irrespective of care provided for patients with universal insurance (capitation payment model). All admitting physicians are aware of the patient's insurance status and the duration of hospitalization is at the discretion of the admitting physician. This study aimed to compare cost of care of patients with and without insurance admitted to a teaching hospital with a primary gastroenterology or hepatology (GIH) diagnosis.

Methods: All hospital inpatients admitted between January 2008 and December 2009 with a primary GI-related diagnosis related group (DRG) were identified. Patients were classified as uninsured (state-funded) or privately insured. Only DRGs with at least five patients in both the insured and uninsured patient groups were analyzed to ensure a precise estimate of inpatient costs. Patient level costing (PLC) was used to express the total cost of hospital care for each patient; PLC comprised a weighted daily bed cost plus cost of all medical services provided (e.g. radiology, pathology tests) calculated according to an activity-based costing approach, cost of medications were excluded. An overall mean cost of care per patient was calculated for both groups. All costs were discounted to 2009 values.

Results: In total, 630 patients were admitted with one of 11 GIH DRGs, 181 (29 %) with private insurance. Pooled mean cost of care was higher for uninsured (6,781 euros/patient) compared to insured patients (6,128 euros/patient). Apart from patients with 'non-cirrhotic non-alcoholic liver disease (non-complex)' in whom mean cost was higher for insured patients, there were no significant differences in mean cost of care nor mean patient age for insured and uninsured groups for any other diagnoses.

Conclusion: Inpatient hospital costs were equivalent for patients with and without private health insurance when care was provided in a single hospital. Provision of care for all patients in a common hospital setting regardless of health insurance status may reduce disparities in healthcare utilization.